Ships are the means by which you expand your empire (see Freighters and War Ships). Each race has a unique set of ships that they may build (although there are common designs) and some of those ships may have special features (e.g. cloaking, gravitronic & hyperdrives etc.). A race cannot build the ships of another race (but under Host V3.2x can often clone one if they acquire it!). Ships come in varying sizes with varying potential for armament (refer to VGAP documentation or help).
The ship in this context is the symbol of a Shipmaster. Although the majority of the ships shown are single masted coastal vessels, close scrutiny reveals that they all differ in varying details of construction, rigging etc. This indicates that the ship is actually a pictorial representation of the shipmaster's own vessel and as such provides a grahic dated record of the individual ships during that period. The fact that nearly 50% of the mast head flags or pendants appear to be flying against the wind indicates the relative sailing modes of 'sailing before the wind' or 'tacking into the wind'. Possibly the portrayal of a ship 'tacking into the wind' is intended not only as the symbol of a shipmaster but also as a tribute to his skill as a master mariner.
The hull of a ship without masts or rigging denotes a shipbuilder.